She said the Island had changed dramatically since the 1970s.

"Black people have taken the lead in many areas of national life -- politics, the judiciary and the Police, to name but a few.'' It was an unusual step for the Queen to touch on race.

Her speech was delivered at the Speaker's Dinner in the Atlantic Room of the Southampton Princess.

Scores of VIPs poured into the hotel, including the Premier the Hon. Sir John Swan and Lady Swan.

Onlookers cheered as the Queen and the Duke of Edinburgh entered the area outside the banqueting hall to a drum roll.

The Queen was dressed in salmon pink with a dazzling multicoloured sequined top. She wore long diamond earrings.

Her left wrist was heavily bandaged following a recent fall from a horse. The other hand had a white glove.

Up to 500 diners tucked into a seven course meal featuring smoked salmon and beef and veal tenderloin with wild mushrooms and spring vegetables.

The Queen, who paid tribute to her Bermudian welcome, spoke of many other changes in Bermuda since the 1970s, including the surge of international business which now competed with tourism as a money-spinner.

"Your reputation as a home for top class companies, free from needless restrictions but still well regulated, has grown.

"And so has the tourist industry, adapting to meet new challenges but never lowering its standards.

"This adaptability has enabled you to withstand, to notable effect, the recent worldwide recession, and provide for the Bermudian people a standard of living which is the envy of many other countries.'' The Queen passed on to a huge challenge facing Bermuda -- the planned closure of the US Naval Air Station.

But she expressed confidence that Bermuda could turn the closure to its advantage.

"Despite all this change I am delighted to find that a high proportion of people in the Island still devote themselves to voluntary and charitable work, looking after the old, the sick and all those who need a helping hand.'' Bermuda's cricketers -- fresh back from the ICC tournament in Kenya -- were not forgotten either.

"You can be proud of your cricketers, who so narrowly failed to qualify for the World Cup.

"You can also be proud of the sportsmen and women who represent Bermuda with such distinction in other fields.'' The Queen spoke of Great Britain's historic gratitude to Bermuda.

"Bermuda is the oldest dependent territory. Your parliament is, after Westminster, the oldest in the Commonwealth.

"This long democratic history has stood you in good stead. Great Britain will never forget all it shares with Bermudians, especially the part you played, and the sacrifices you made, in two world wars.

"We value as highly as you do the basic values of democracy, freedom of choice, enhancement of the quality of life, tolerance and respect for the views of others.

"We look forward to meeting many young people tomorrow, and to seeing the product of the education and training system of which you are rightly proud.

"I am sure we shall find that all the energy, ingenuity and spirit of adventure which have been shown by their forebears are still there in the youth of today, ready to serve Bermuda of tomorrow.'' In his speech, the Premier immediately focused on Bermuda's diminishing role in the Royal Navy's control of the Atlantic.

He told the Queen, Bermuda would be saying farewell to HMS Malabar.

"When they leave, two centuries of continuous Royal Navy presence on this Island will be broken.'' The Speaker the Hon. Ernest DeCouto told the Queen: "This is indeed a milestone in the history of Speaker's Dinners in Bermuda, for once again, after a period of some 18 years Your Majesty and Your Royal Highness have graced this event with your presence.'' GRAND ENTRANCE -- The Queen and Prince Philip enter the Southampton Princess hotel for the Speaker's Dinner last night. The Queen's bandaged left arm can clearly be seen. She injured the arm in a riding accident in England and it has been in plaster during the entire overseas tour.